High Debt and Cost of Living Haven’t Hurt Hawaii’s Credit Scores

High Debt and Cost of Living Haven’t Hurt Hawaii’s Credit Scores article image.

Visitors to Hawaii may say to themselves: "This place is amazing; I wish I could live here." And while there's a reason Hawaii is considered a top tourist destination, tell them about the state's high cost of living and high debt and they may change their tune.

Despite Hawaii's extreme cost of living—the highest in the nation—and the fact that the average debt balance there is high and growing fast, islanders have proven that they will not let their credit scores suffer as a result. Along with their average FICO® Score of 723—the seventh-best in the nation—residents' ability to obtain large credit limits and pay back debt on time sets them apart from other high debt states.

As part of our ongoing look at debt and credit in the U.S., Experian analyzed consumer credit data from the second quarter (Q2) of 2019 to learn more about how a state with one of the highest costs of living and top debt can still maintain some of the best credit scores in the country. Read on for our insights and analysis.

Despite Debt, Hawaii Ranks as a Top State for Good Credit

Among all states, Hawaii has the seventh-best credit score of 723, according to Experian data from Q2 2019. The average score on the islands is 20 points higher than the national average score of 703 and only 10 points behind the top score in the nation, Minnesota's 733-point average.

Since Q2 2015, Hawaii's average credit score has climbed eight points, matching the average increase seen nationwide during that time. This slow and steady average score increase emphasizes that Hawaiians have long been good at staying on top of their credit scores and that this increase is not abrupt or due to any sudden changes.

Consumers Manage High Debt Better in Hawaii Than in Any Other State

The largest contributing factor to a person's credit score is how good they are at paying all their bills on time. Hawaii—the state with the second-highest average debt balance in the nation—outperforms nearly every other state, especially those with high debt balances, when it comes to making on-time payments.

Hawaii had an average delinquency ratio of 11.9% in Q2 2019, according to Experian data; only three other states' ratios were lower. Delinquency ratios are calculated by comparing how many accounts have ever been delinquent (30 days or more past due) with how many total accounts a consumer has. Minnesota consumers had the lowest delinquency ratio, at 10.4%, followed by South Dakota (11.3%) and Vermont (11.8%).

When compared with the top five states with the highest total debt amounts—among which Hawaii ranks second—the state's delinquency ratio is even more of a standout statistic. Washington, D.C., which had the highest total average debt of any state in Q2 2019, had a delinquency ratio that was nearly double that of Hawaii's.

In fact, all the other states in the top five had a delinquency ratio that was significantly higher than Hawaii's in Q2 2019. This trend illustrates that even in the face of high debt, consumers in Hawaii have not been deterred from achieving top scores, even though managing large debt balances has proven difficult for others.

States With the Highest Total Average Debt
StateAverage FICO® ScoreTotal Average DebtDelinquency Ratio
District of Columbia703$146,74119.3%

Source: Experian data from Q2 2019

Hawaii's High Credit Limits Contribute to Top Scores

Another major factor in a good credit score is the ability to maintain a low credit utilization ratio. Credit utilization is a comparison of a consumer's total outstanding credit debt with their total credit limit, expressed as a percentage. Consumers in Hawaii have the highest average credit limit in the U.S. at $52,936, according to Experian data from Q2 2019. That's more than $15,000 above the national average of $37,524.

When a consumer has a high total credit limit, it's easier to carry higher credit card balances and still maintain a low credit utilization ratio. In Hawaii, this is appears to be the case, as consumers in the state carry the eighth-highest credit card balances, but still have stellar credit scores.

Mortgage Balances Account for Almost All Consumer Debt in Hawaii

Hawaii's total debt levels are not extraordinary—the state's debt balance ranks 34th in the country—which makes sense given it ranks 40th in terms of state population. But even though its overall debt isn't high, some of the state's average consumer debt levels—like credit card and mortgage balances—are top in the nation.

When it comes to housing, Hawaii is the most expensive place in the U.S. to buy a home, with the median home value coming in at $619,000—six times that of the median in West Virginia, the country's cheapest state for homes.

Overall, Hawaii's total of $64 billion in outstanding mortgage debt makes up 86% of all major consumer debt there—that's the third-highest ratio in the country following California (87%) and the District of Columbia (90%), according to Experian data from Q2 2019.

Individually, consumers in the state owed an average of $345,963 in mortgage debt in Q2 2019. That's a 13% increase from the average of $306,585 they owed in the same quarter five years ago. The heavy mortgage burden Hawaiians deal with is the third-highest in the nation, and could be another factor contributing to consumers in the state having such good FICO® Scores on average.

States With the Highest Ratio of Mortgage Debt to Total Debt
StateAverage FICO® ScoreTotal Mortgage DebtTotal DebtRatio of Mortgage Debt to Total Debt
District of Columbia703$37 Billion$41 Billion90%
California708$1.8 Trillion$2.2 Trillion87%
Hawaii723$64 Billion$74 Billion86%
Massachusetts723$284 Billion$332 Billion85%
Colorado718$258 Billion$302 Billion85%

Source: Experian data from Q2 2019. Total debt figure includes only mortgage, bank card, auto and personal loan debt.

Hawaii's Average FICO® Scores Reflect Consumers' Relationship With Debt

The fact that Hawaiians have the second-highest total average debt in the country and still maintain the seventh-highest average FICO® Score is no surprise, especially when you look at their relationship with debt. They have the highest overall limits—which means they can spend more without penalty—and they have the second-lowest delinquency ratio—which means they are repaying their debt better than nearly anyone in the country.

These two aspects of your credit—having a high overall credit limit and paying your bills on time—can be extremely helpful in having a good credit score. Hawaiians, with their average of 723, are an example of how this can work even in the face of a high cost of living.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.